Don’t sit this one out: The Internet of Things bodes revolutionary changes for manufacturers

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There are two points that Lev Gonick, co-founder and CEO of OneCommunity, thinks manufacturers should know about the Internet of Things revolution, which is commonly defined as “a proposed development of the Internet in which everyday objects have network connectivity, allowing them to send and receive data.”

The first point is, the word “proposed” doesn’t belong there anymore.

“The most compelling reality is that the IoT revolution is very much here,” he says.

Lev Gonick

Lev Gonick

It’s not a fantasy that sensors installed inside equipment are monitoring the parts to see if they have exceeded their designed thresholds and are sending reports to owners. Or if networked sensors, cameras and lasers are analyzing manufacturing processes to determine if a part is accepted or rejected. Or if smart homes are doing any number of operations controlled by a smartphone.

Catherine Bules

Catherine Bules

Already, 18 percent of industrial machine companies are using the IoT to some extent, says Catherine Bules, project manager for OneCommunity, a nonprofit organization whose mission is to expand high-speed broadband access to implant Northeast Ohio as a location for innovation and economic growth.

“For manufacturers looking ahead, IoT is the smart move, and it is not looking into a crystal ball and making something out of nothing,” she says. “It’s the natural progression to what is already happening.”

But Gonick’s second point is far more compelling.

“It is the second wave, the tsunami that is coming, that we need to alert manufacturers about because it will simply overwhelm those prepared to bet that they can sit this one out.”

But first, some background …

First step as a business expands: Nail down what drives the decision

If a manufacturer wants to expand its product line, for example, and needs financing, lenders often will ask some pointed questions, says Jordan Peterson, PNC senior vice president and business banking credit product manager. But don’t fear them.

nat_sr_JordanPeterson“What is driving the decision to expand? Is it a market movement or an opportunity? Who is giving the company advice on it?” Peterson asks.

“If you have done this before, what lessons have you learned that you want to incorporate into your strategy, decisions and execution going forward?”

The answers are going to tell the lender about how well the company has thought the expansion through, he says. It is critical that the firm has analyzed the risks because the lender needs to see those efforts.

A track record of previous successful expansions obviously can indicate future success too, he says. Typically, for small- to medium-size manufacturers, a bank will examine if a company has experience and knowledge of the matter.

“For loans and companies this size, we typically are not going to run an excess of financial projections, but we look more at their current cash flow ability to pay for the upgrades and changes,” he says.

Peterson says an obvious red flag is when a business wants to expand into something it hasn’t done before.

“Maybe a company wants to open a brewery and its previous business experience was making machine parts. I’m not sure that really fits.”

One of the key performance indicators a bank needs to know is the cash flow and how strong it is.

“Are they just barely able to pay for these changes so that if something doesn’t work, if they have any cost overruns or if they don’t get the sales out the door as fast as they thought, do they have a cushion there?” he asks.

How to reach: The PNC Financial Services Group, (877) 535-6314 or www.pnc.com

What connectivity will cause

To get a grip on how the IoT will impact manufacturers — and indeed anyone else — Google’s top-rated futurist speaker Thomas Frey, executive director and senior futurist at the DaVinci Institute in Denver, makes it a big part of his job to consider and tell others what IoT connectivity will bring.

The sensor movement will be huge, Frey says. Light and motion sensors have been around for years — even GPS steering for farm tractors — but as technology has expanded sensor capabilities and reduced their size, it has opened the door for their use nearly everywhere.

ThomasFrey

Thomas Frey, Ph. D.

“We are going to want to build sensors into all kinds of things,” Frey says. “These sensors come with miniature microchips, and researchers are developing the technology so that the chips can draw their power out of the air.”

Because of exponential growth, by 2036 there would be an estimated 100 trillion sensors in the world, Frey says.

This realization of the enormous new capabilities that were never anticipated is just one of the issues people try to wrap their heads around, he says.

“You start seeing some of the implications, and we have to start dipping our toe in the water to actually get the impact of where that is going to go.”

The tsunami is coming

When Gonick describes the technology tsunami that is coming, he puts it this way: more than 95 percent of the devices that can be connected to the Internet still remain disconnected.

“That is the tsunami,” he says. “Right now, we think about the IoT and, yes there are a handful of good examples, but they are kind of verticalized.”

The IoT revolution will affect many, if not all, areas, Gonick says.

“It’s all going to be sensor, controller and data collection activity, so whether the domain of interest is manufacturing in support of the city, transportation, in the context of lighting, factory floors, clothing — you name the domain — nothing, but nothing will be left untouched. That is the second wave.”

Health care and manufacturing will receive the bulk of the IoT impact, Bules says.

“I think health care has very much caught on to it,” Gonick says. “There are the health care devices space and the monitoring space. The whole use of sensors and controllers is taking off in a big way.”

Manufacturing costs will drop

What the manufacturing industry will see with the advent of the IoT is a rapid return on investment, says Bob Scaccia, president of USA Firmware, who describes himself as an IoT thought leader. USA Firmware is engaged in a number of IoT projects with large and small regional companies.

Bob Scaccia

Bob Scaccia

“Adoption and the cost benefit analysis is easiest to see for the manufacturers,” he says.

The cost of manufacturing will decrease significantly, Scaccia says.

“Think about a manufacturer with a huge capital investment in equipment and automated machinery. What if that manufacturer were able to connect machinery critical performance parameters in real time to the Internet and then, via software applications, process that information and look at trends and sudden changes in behavior of those parameters?”

Not only would you be able to be more proactive vs. reactive, but you will probably learn from this data much more about how your complete manufacturing system runs and operates efficiently and productively, Scaccia says.

He says another benefit manufacturers would realize from the IoT is greatly improved product quality.

“If your products are connected to the Internet and their behavior and performance can be monitored even after they are ‘in use,’ manufacturers don’t have to stop the SPC analysis,” Scaccia says. “It can continue for the life of all their products in the field. This is huge; so much of this performance has not been visible to the manufacturer.”

A third advantage of the IoT is more accurate customer feedback. While the feedback process now often involves surveys on product use and what customers like or dislike, sensor and measurement technologies would be utilized instead.

Job creation likely; training needed

Will the IoT create jobs or will it just do away with them? It’s a subject many want to examine.

“Unemployment has not tracked technological advancement,” Scaccia says. “In fact, we live in a time when new technology that simplifies our jobs and improves manufacturers’ productivity is evolving and improving at rates never seen throughout the history of man.”

He believes the end result of the IoT revolution will be more jobs created than eliminated.

“With the IoT projected to be a $10 trillion to $20 trillion market by 2020, and it opening up what is likely to be all sorts of services and industries we cannot even visualize today, more jobs will be created than lost,” he says. “I can easily see more jobs coming back from overseas. We can manufacture here if our cost structure is competitive.”

Frey foresees a labor market turnover as the IoT grows.

“There will be lots of churn in the workforce. We projected that by 2030, workers should plan on rebooting their career at least six times in their life,” he says.

“This will increase the demand for micro-colleges. That makes traditional colleges a poor fit for that type of education that needs to happen.”

Gonick echoes Frey’s opinion that education needs to change.

“The education system is one of the biggest challenges right now. Automakers are spending literally tens of thousands of dollars a month per mechanic to educate them because the education system is not actually producing them,” he says.

Frey, however, stresses that the world will not become populated only with robots.

“All of this technology eventually breaks down; it needs humans to fix it and repair it,” he says. “That is where humans come in. We also need humans to oversee things, to manage them. This cannot become a human-less society like some people are worried about.”

How to reach:

OneCommunity, (216) 923-2200 or www.onecommunity.org
DaVinci Institute, (303) 666-4133 or www.davinciinstitute.com
USA Firmware, (440) 570-1809 or www.usafirmware.com

Connecting

OneCommunity offers 100 gigabyte network as answer to big data, Internet of Things demands

Ever since the early days of the Internet, users have been clamoring for accessibility and speed. OneCommunity has been working on that — and it’s paying off.

As the Internet of Things brings more big data, the “pipeline” or bandwidth needs to be larger to handle the demand. Such was the genesis of OneCommunity, founded in 2003 as a Greater Cleveland nonprofit community-owned broadband fiber network, offering services to a variety of anchor institutions, businesses, schools and local governments.

A for-profit arm called Everstream was launched last year to expand services to the enterprise community.

OneCommunity is collaborating with the HealthTech Corridor and the city of Cleveland to bring the first commercially available 100GB fiber network in the U.S. The ultra high-speed network is slated for completion later this year, and will run from Cleveland’s HealthTech Corridor (Euclid Avenue) to University Circle.

“Today, the fastest way of moving data is one lane of traffic, except there are lots and lots of cars, and that one lane is getting clogged up pretty quickly,” says Lev Gonick, co-founder and CEO of OneCommunity. “We are going to change the number of lanes on the highway from one lane to 100 lanes. Now those same cars will have 100 lanes to travel down.”

More than 2,500 miles of fiber optic cable has been installed throughout 24 Northern Ohio counties, connecting 80 to 90 percent of higher education and health care institutions in the area, says Catherine Bules, project manager for OneCommunity.

“The city of Cleveland and the HealthTech Corridor have been conducting regional and national recruitment for this area to relocate existing companies, to attract new startups to the HealthTech Corridor, and they have been very successful in doing that so far,” Bules says. “They are going to continue to be successful, especially with the construction of this 100GB network.”

How to reach: Everstream, (844) 387-7876 or www.everstream.net